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10 Dec 2016 3:26:46am

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The IMf and World Bank have always adopted the so called neo-monetary approach of Milton Friendman of the early 1970's. This model of adjusting a nation's economic crisis assumes there is a very high inflation rate and to reduce it was to use cut in government spendings.

The trouble with this is that this is exactly against what the traditional approach that people have used since the lesson of the great depression and not all economies suffer from high inflation.

So inevitably, all nations that receive IMF and World Bank assistance go into deep recession. And if they are not lucky, and the world economy also goes into recession while these nations are somehow on their feet, they also sink into another recession. So you tend to see a whole decade or longer of economic pain which you do not need in the first place. This was the case with Argentinia.

Miltion Frienman and IMF-World Bank basically should never be called in by any government if possible. It would be much wiser to approach some wealthY nations for direct measure.

Italy is now rumoured going to China to sell their government bonds. This is a far better way as the purchase of Italian government bonds is like assisting Italy by China. This allows Italy to go through the crisis and sort out their problems in an orderly fashion. The likelihood of Italy defaults on China is as high as it would on IMF assistance. However Italy would not need to adopt measures that would ruin its economy as IMF's neo-monetarism attitude definitely would as history proves repetedly.

I compare Milton Friedman's neo-monetarism as applied by IMF as Nazi jackboot movements.

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